Internet IPOs: 2005 Year In Review

2005 was a relatively quiet year for Internet IPOs with only 11 issues coming to market.  The average IPO was up 3.2%, but performance was really all over the map as the standard deviation of the group was a whopping 59%.  Over half of the IPOs ended the year below their issue price which indicates that underwriting quality wasn't great, which is another way of saying it was typical.

The most active IPO sectors were Asian Internet companies (HRAY, GRVY, BIDU) and online gambling (PRTY, FPA, 888, EOL).  The best performing IPO was Baidu (BIDU) which fortuitously combined the two investment frenzies of China and Search.  However, unless you received an allocation of IPO shares, BIDU has been a pretty poor investment with its price declining almost 100% from its first day close and ending the year close to its record low.  It still trades at 54X times sales though, so further declines are a distinct possibility.   The worst performing IPO was Odimo, an online diamond/jewelry retailer which apparently isn't selling a lot diamonds and/or jewelry.

A complete list of the IPOs follows:

1. Hurray   Ticker:HRAY
   Issue Date: 2/4/05  Issue Price: $10.25
   Price Change: -12.3%
   Comment: Chinese provider of WAP content to mobile phones.
2. Gravity   Ticker:GRVY
   Issue Date: 2/8/05  Issue Price: $13.50
   Price Change: -46.7%
   Comment: Japanese operator of MMORPG games.  Run by the son of Softbank's founder.
3. Odimo   Ticker:ODMO
   Issue Date: 2/15/05  Issue Price: $9.00
   Price Change: -85.0%
   Comment: Online jewelry and diamond retailer.   3rd worst performing stock of 2005.
4. Fastclick   Ticker:FSTC
   Issue Date: 4/1/05  Issue Price: $12.00
   Price Change: -15.8%
   Comment: Pay-per-click advertising services firm acquired just 6 months after going public.
5. Party Gaming   Ticker:PRTY.L
   Issue Date: 6/2/05  Issue Price: 116p 
   Price Change: 15.5%
   Comment: Operator of largest online poker site.  $500M+ in cashflow/year.
6. Empire Online  Ticker:EOL.L
   Issue Date: 6/15/05  Issue Price: 175p
   Price Change: -60.1%
   Comment: Operator of largest Party Poker "skin".  Stock cratered when Party moved Empire's member to their own seperate, and much less populous, server.
7. FireOne Group   Ticker:FPA.L
   Issue Date: 6/27/05  Issue Price: 241p
   Price Change: 43.2%
   Comment: Operator of online payments system focused on online gambling. 
8. Baidu   Ticker:BIDU
   Issue Date: 8/5/05  Issue Price: $27.00
   Price Change: 133.0%
   Comment: The Google of China ... or is it?
9. 888 Holdings  Ticker:888.L
   Issue Date: 9/29/05  Issue Price: 175p
   Price Change: 10.3%
   Comment: Largest online casino operator and one of largest online poker houses.
10. WebMD   Ticker:WBMD
    Issue Date: 9/29/05  Issue Price: $17.50
    Price Change: 66%
    Comment: Spin-off of WebMD online website and associated publishing operations.
11. Website Pros   Ticker:WPSI
    Issue Date: 11/2/05  Issue Price: $10.00
    Price Change: -13.0%
    Comment: One of the largest independent small business website hosting companies.